Statement 1: Everything else equal, an effective annual rate will be greater than the bond equivalent yield on the same security. Statement 2: Money markets exist to help reduce the opportunity cost of holding cash balances.     a. Both statements are true b. Statement 1 is true; Statement 2 is false c. Statement 1 is false; statement 2 is true d. Both statements are false

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A: The following statements are incorrect -

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Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.